Agricultural Carbon Credits: Marketing a 21st Century Commodity from Our Farms or Ranches Robert Carlson, NDFU President NFU Carbon Credit Program April 15, 2009 Robert Carlson, NDFU President NFU Carbon Credit Program April 15, 2009

Challenges to Agriculture Offsets  Some oppose offsets in general, since they simply “allow polluters to buy emission rights”. However, offsets, as opposed to allowances represent tons of sequestered GHG or avoided emissions  People also oppose agricultural offsets specifically due to perceived lack of additionality, permanence, and enforceability.  They don’t understand prototcols now in place insuring science based conservative crediting rates, third patry verification, full accountability in the event of non-compliance, and reserve pools of credits.  There are several attempts being made to have standards clarified to receive USDA blessing in a mandatory compliance system.  Agriculture can quickly bring millions of tons of stored greenhouse gases to market and it will reduce the overall costs of mitigation.  Continued need for soil science to demonstrate organic matter and carbon level changes with management practice changes. Nitrous oxide needs to be accounted for.  Some oppose offsets in general, since they simply “allow polluters to buy emission rights”. However, offsets, as opposed to allowances represent tons of sequestered GHG or avoided emissions  People also oppose agricultural offsets specifically due to perceived lack of additionality, permanence, and enforceability.  They don’t understand prototcols now in place insuring science based conservative crediting rates, third patry verification, full accountability in the event of non-compliance, and reserve pools of credits.  There are several attempts being made to have standards clarified to receive USDA blessing in a mandatory compliance system.  Agriculture can quickly bring millions of tons of stored greenhouse gases to market and it will reduce the overall costs of mitigation.  Continued need for soil science to demonstrate organic matter and carbon level changes with management practice changes. Nitrous oxide needs to be accounted for.

 The long term commitment to a management practice is what we are actually selling.  Contracts are written with the manager/operator of the land (not necessarily the owner)  But who is buying???? (potentially any industry under the cap)  The long term commitment to a management practice is what we are actually selling.  Contracts are written with the manager/operator of the land (not necessarily the owner)  But who is buying???? (potentially any industry under the cap)

 Minimum 5 year commitment to continuous no-till or forage production.  ton/ per acre/ per year.

 Minimum 5 year commitment to maintaining grass stand.  ton/ per acre/ per year.

Farmers Union Carbon Credit Program - Current Statistics  Farmers Union wrote over $8,100, in carbon credit checks to 1,050 producers in 2007 and  We are currently marketing carbon credits from no-till, seeded grass, for 4900 contract holders in 40 states for about 3 million acres.  Recently registered credits and marketing credits for about 450 ranchers for over 2.7 million acres of managed native rangeland in 8 western states.  Applications received for about 8000 acres of forestry offsets in 9 states.  Farmers Union wrote over $8,100, in carbon credit checks to 1,050 producers in 2007 and  We are currently marketing carbon credits from no-till, seeded grass, for 4900 contract holders in 40 states for about 3 million acres.  Recently registered credits and marketing credits for about 450 ranchers for over 2.7 million acres of managed native rangeland in 8 western states.  Applications received for about 8000 acres of forestry offsets in 9 states.

Verification  The Chicago Climate Exchange has approved Third-Party verifiers. (NDASCD) (SES, Inc.)  10%-15% of acres will be verified each year (random sample)  Large ranches and larger tree plantings must be verified in the first year, after that subject to random sample. (>10,000 acre ranches)  Since payments are based on a management practice, the practice is what is being verified.  The Chicago Climate Exchange has approved Third-Party verifiers. (NDASCD) (SES, Inc.)  10%-15% of acres will be verified each year (random sample)  Large ranches and larger tree plantings must be verified in the first year, after that subject to random sample. (>10,000 acre ranches)  Since payments are based on a management practice, the practice is what is being verified.

North Dakota Enrollments

South Dakota Enrollments

Nebraska Enrollments

Step 1: Determine eligibility

Step 2: Set up Account

Print your account information Step 3: Add a contract

Once again, confirm eligibility

Enter field or pasture information

Print Contract Sign

Completing your enrollment….  No-Till/ New Grass  Signed Contract and Certification Report  FSA form 578 and Maps  No-Till/ New Grass  Signed Contract and Certification Report  FSA form 578 and Maps  Rangeland  Signed Contract and Certification Report  FSA form 578 or another document showing management control.  Prescribed Grazing Schedule  Labeled Pasture Maps  Grazing Narrative  Ranch Records 2003-present  Formal Grazing Plan

Prescribed Grazing on Native Rangeland  Three aspects of “prescribed grazing”  Rotational grazing  Reduced stocking rates as determined by NRCS or other third party  Season of use consideration  Three aspects of “prescribed grazing”  Rotational grazing  Reduced stocking rates as determined by NRCS or other third party  Season of use consideration

Wrapping Up…  Farmers Union or other aggregators are the bridge between agricultural producers and the market for carbon offsets.  For producers who can commit to a management system, carbon credits are an additional source of income.  The system allows producers to benefit if the price improves.  If a mandatory cap and trade system is enacted agriculture and forestry offsets can lower costs of compliance for emitters at first, and can provide mitigation for huge amounts of GHG emissions  Farmers Union or other aggregators are the bridge between agricultural producers and the market for carbon offsets.  For producers who can commit to a management system, carbon credits are an additional source of income.  The system allows producers to benefit if the price improves.  If a mandatory cap and trade system is enacted agriculture and forestry offsets can lower costs of compliance for emitters at first, and can provide mitigation for huge amounts of GHG emissions